An explosion has ripped through a naval base in southern Cyprus, killing 12 people, injuring dozens more and leading to the resignation of the country's defence minister and military chief.

The blast – which happened at the Evangelos Florakis base just before 6am local time on Monday – is thought to have been triggered when a brush fire set light to containers of confiscated gunpowder that had been stored at the facility.

According to state radio the dead include two members of the Cypriot navy, two soldiers and five firefighters. The injured have been taken to hospitals in Nicosia, Limassol and Larnaca and the authorities are appealing for people to give blood.

The intensity of the explosion knocked out the island's largest power plant, caused extensive damage to a neighbouring community, and in a popular holiday resort two miles from the site the windows and doors of restaurants were blown out. "The place looks like it was hit by a massive bomb," a witness told Reuters.

The country's defence minister, Costas Papacostas, and the country's top military official, the National Guard chief, Brigadier General Petros Tsalikides, resigned shortly after the incident, according to a government spokesman. Investigators had ruled out sabotage as a cause for the blast, the spokesman added.

State radio quoted the national guard chief, Petros Tsalikides, who was at the naval base, as saying the explosion had caused a "great catastrophe".

Video footage screened by the state broadcaster, CyBC, showed damaged cars along a stretch of highway near the naval base. One person who was in one of the cars passing the base at the time of the explosion told CyBC it felt like "a bomb had been dropped on the car".

The concussion wave from the blast severely damaged the island's main power station, leading to power cuts in several areas, including Larnaca.

An official with Cyprus Electricity Authority, Yiannis Tsouloftas, said the power station would remain offline for at least the rest of the day. The island's two other smaller power stations were trying to cover electricity demand, Tsouloftas said.

"There are several parts of the island that are without power," Costas Gavrilidis, a spokesman for state power utility AHK, told CyBC.

Airport authorities said both Paphos and Larnaca airports were reducing power consumption to the minimum possible and had turned on their generators.

A defence ministry official said the blast appeared to have been caused by a brush fire that broke out nearby and spread to the base.

The fire ignited gunpowder stored in containers that Cypriot authorities confiscated in February 2009 from a ship sailing off its coast. The ship, the Cypriot-flagged Monchegorsk, had been suspected of carrying the gunpowder from Iran to the Gaza Strip.

A fire department spokesman, Leonidas Leonidou, said firefighters received a call at 4.27am saying the fire was inside the base and near the containers.

"Whether it started on or off the base, and how it started, we cannot say," he told Associated Press.